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Pioneer exits deepwater Gulf, Argentina Company slashing exploration budget from 30% to 15-20%; says focus will be on onshore North America, Alaska, Africa Ray Tyson Petroleum News Correspondent
Pioneer Natural Resources is looking to sell its Gulf of Mexico deepwater assets, a surprise move for a company that has contributed a significant amount of cash and effort to deepwater exploration and development in the Gulf.
Also on the auction block are company properties in Tierra del Fuego, Argentina, Pioneer said Sept. 1, adding that included in Pioneer’s new strategy is a plan to repurchase $1 billion of company stock.
Pioneer said it expanded and balanced its exploration portfolio in onshore North America, Alaska and Africa, believing “these opportunities are now better aligned with the company’s current exploration objectives.”
Specifically, Pioneer said it slashed its exploration budget from 30 percent to 15-20 percent of capital and was “implementing a plan to exit exploration in deepwater Gulf of Mexico.”
The company said it would reallocate cash savings from deepwater exploration to North America onshore development and extension drilling, a move designed to reduce Pioneer’s “risk profile.”
“Divesting these assets, if successful, would concentrate our portfolio and re-establish a more predictable foundation capable of more consistent, sustainable production growth while enhancing our net asset value,” said Tim Dove, Pioneer’s chief operating officer.
High commodity prices and an “active asset market” prompted Pioneer “to pursue the potential divestiture” of its properties in deepwater Gulf of Mexico and southern Argentina, the company said. Company entered deepwater Gulf in 1998 Pioneer, which entered the deepwater Gulf in 1998, has drilled 33 successful exploration and development wells, holds working interests in three producing projects, owns interests in several discoveries that are being considered for commercialization and has interests in 90 deepwater blocks “with attractive but higher-risk exploration opportunities,” the company added.
Pioneer’s assets in the deepwater Gulf include Canyon Express, a joint venture of three gas discoveries in the Eastern Gulf, producing fields located in the so-called Falcon Corridor, and satellite discoveries in the Devil’s Tower project, Triton, Goldfinger and Ozona Deep.
The company’s new $1 billion share repurchase program represents about 15 percent of Pioneer’s total equity market value and will be financed by the company’s credit facility and asset sale proceeds.
“The current commodity pricing environment offers a unique opportunity to deliver near-term value to our shareholders by repurchasing shares at attractive prices and increasing the dividend,” said Scott Sheffield, Pioneer’s chief executive officer.
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